Corporate Information
Corporate Info
FAQ


Printer Friendly Version Print Version
SEMCO ENERGY Reports Results for the Quarter and Six Months Ended June 30, 2007

PORT HURON, Mich., Aug 08, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- SEMCO ENERGY, Inc. (NYSE: SEN) today announced its financial results for the quarter and six months ended June 30, 2007. For the quarter ended June 30, 2007, the Company reported a net loss available to common shareholders of $3.0 million (or $0.08 per basic and diluted share) compared to a net loss available to common shareholders of $3.5 million (or $0.10 per basic and diluted share) for the quarter ended June 30, 2006. The net loss available to common shareholders for the second quarter of 2007 includes costs associated with the pending sale of the Company of $0.4 million, net of income taxes (or $0.01 per basic and diluted share). For the six months ended June 30, 2007, the Company reported net income available to common shareholders of $12.1 million (or $0.34 per basic share and $0.32 per diluted share) compared to net income available to common shareholders of $7.7 million (or $0.23 per basic share and $0.21 per diluted share) for the six months ended June 30, 2006. Net income available to common shareholders for the first six months of 2007 includes costs associated with the pending sale of the Company of $2.2 million, net of income taxes (or $0.06 per basic share and $0.05 per diluted share).

The primary factors contributing to the higher earnings for both the second quarter of 2007 and the first six months of 2007, when compared to the same periods of 2006, were an increase in gas distribution margins, an increase in non-operating income and a decrease in financing-related costs, offset partially by costs incurred in connection with the pending sale of the Company, an increase in operations and maintenance (O&M) expense at the Company's Gas Distribution Business, and an increase in depreciation expense and property tax expense. In addition, when comparing the first six months of 2007 to the first six months of 2006, profits earned by one of the Company's non-regulated businesses from the sale of natural gas increased net income by approximately $0.4 million during the first six months of 2007.

The increase in gas distribution margins, which increased net income for the second quarter of 2007 and first six months of 2007 by approximately $1.3 million and $6.5 million, respectively, when compared to the same periods in 2006, was primarily due to a rate increase in Michigan and higher gas consumption per customer. Non-operating income for the second quarter and first six months of 2007, when compared to the same periods of 2006, increased net income by approximately $0.3 million and $0.4 million, respectively. The increase in non-operating income was due primarily to interest earned on higher levels of invested cash. Financing-related costs decreased primarily as a result of lower levels of outstanding debt and Preferred Stock. When comparing the second quarter of 2007 to the second quarter of 2006 and the first six months of 2007 to the first six months of 2006, the decrease in financing-related costs increased net income by approximately $0.3 million and $0.9 million, respectively. The increase in O&M expense at the Gas Distribution Business, which decreased net income for the second quarter of 2007 by approximately $0.7 million when compared to the second quarter of 2006, was primarily due to increases in uncollectible customer accounts and various other expenses, including employee compensation. The increase in O&M expense at the Gas Distribution Business decreased net income for the first six months of 2007 by approximately $1.1 million, when compared to the first six months of 2006, and was primarily due to increases in insurance and claims costs, uncollectible customer accounts and various other expenses, including employee compensation, partially offset by a charge incurred in connection with a sublease during the first quarter of 2006 that did not recur in 2007.

George A. Schreiber, Jr., Company President and Chief Executive Officer, said, "We are pleased with the Company's results thus far in 2007 and are on track for a very good year. A number of significant events occurred during the second quarter. We improved our financial position by repaying $15 million of long-term debt in April and May. In June, the holders of the Company's Common Stock approved the sale of the Company to Cap Rock Holding. All necessary financing to close the Cap Rock transaction is now in place. The primary remaining item required for closing the transaction is to gain regulatory approval in Alaska. We are moving forward pursuant to a procedural order from the Regulatory Commission of Alaska, which calls for hearings to begin early in September."

OUTLOOK FOR 2007

The Company's outlook regarding 2007 earnings, cash flows and capital expenditures are unchanged from previous guidance. As the holders of the Company's Common Stock have approved the Cap Rock transaction and the Company is proceeding towards an expected closing by the end of this year, the Company intends to discontinue providing future guidance on these financial items.

SEMCO ENERGY, Inc. distributes natural gas to more than 400,000 customers combined in Michigan, as SEMCO ENERGY GAS COMPANY, and in Alaska, as ENSTAR Natural Gas Company. It also owns and operates businesses involved in propane distribution, intrastate pipelines and natural gas storage.

The following is a "Safe-Harbor" statement under the Private Securities Litigation Reform Act of 1995. This release contains forward-looking statements that involve risks and uncertainties. Statements that are not historic facts, including statements about the Company's outlook, beliefs, plans, goals and expectations, are forward-looking statements. Factors that may impact forward-looking statements include, but are not limited to, the outcome of the pending transaction to sell the Company, the effects of weather, the economic climate, competition, rising commodity prices and resulting increases in working capital requirements, changing conditions in the capital markets, regulatory approval processes and rate recovery mechanisms, gas procurement opportunities, compliance with covenants and success in accomplishing financing objectives, maintaining an effective system of internal controls, success in obtaining new business, success in defending claims against the Company, and other risks detailed from time to time in the Company's SEC filings.



                              SEMCO ENERGY, INC.
                     News Release Statistics (Unaudited)
                   (in thousands, except per share amounts)

                                       Three months ended   Six months ended
                                            June 30,            June 30,
                                          2007     2006      2007      2006

    Statement of Operations data

      Operating revenues                $119,671  $97,035  $431,802  $368,511

      Cost of gas sold                    83,890   63,515   326,218   276,119
      Operations and maintenance          21,061   19,565    46,599    39,198
      Depreciation and amortization        7,486    7,218    14,952    14,367
      Property and other taxes             2,711    2,174     6,051     5,230

      Operating income                     4,523    4,563    37,982    33,597

      Other income and (deductions)
        Interest expense                  (9,496) (10,181)  (19,524)  (20,730)
        Other                              1,165      807     2,075     1,363
          Total other income and
           (deductions)                   (8,331)  (9,374)  (17,449)  (19,367)

      Income tax (expense) benefit         1,504    1,835    (7,133)   (5,068)

      Net income (loss)                   (2,304)  (2,976)   13,400     9,162

      Dividends on convertible
       cumulative preferred stock            651      506     1,302     1,454

      Net income (loss) available to
       common shareholders               $(2,955) $(3,482)  $12,098    $7,708

      Earnings per share - basic
        Basic                             $(0.08)  $(0.10)    $0.34     $0.23
        Diluted                           $(0.08)  $(0.10)    $0.32     $0.21

      Average number of common shares
       outstanding
        Basic                             35,523   34,618    35,488    34,111
        Diluted                           35,523   34,618    42,114    42,720



                              SEMCO ENERGY, INC.
                     News Release Statistics (Unaudited)
               (dollars in thousands, except per share amounts)

                                       Three months ended   Six months ended
                                            June 30,            June 30,
                                          2007     2006      2007      2006

    Business Segment Information

      Operating revenues
        Gas Distribution                $118,160  $95,664  $424,847  $364,428
        Corporate and Other                3,265    3,372    10,762     8,015
        Reconciliation to Consolidated
         Financial Statements
          Intercompany eliminations       (1,754)  (2,001)   (3,807)   (3,932)
          Consolidated operating
           revenues                     $119,671  $97,035  $431,802  $368,511

      Operating income (loss)
        Gas Distribution                  $4,726   $4,548   $39,921   $32,872
        Corporate and Other                 (203)      15    (1,939)      725
          Consolidated operating income   $4,523   $4,563   $37,982   $33,597

      Depreciation and amortization
       expense
        Gas Distribution                  $7,179   $6,888   $14,332   $13,704
        Corporate and Other                  307      330       620       663
          Consolidated depreciation and
           amortization expense           $7,486   $7,218   $14,952   $14,367

    Gas Distribution Operating
     Statistics

        Volumes sold (MMcf)               10,769    9,417    41,784    36,048
        Volumes transported  (MMcf)        8,925   12,752    20,699    27,275
        Number of customers at end of
         period                          410,114  408,826   410,114   408,826
        Weather statistics:
          Degree days
            Alaska                         1,583    1,712     5,946     5,831
            Michigan                         803      750     3,977     3,692
          Percent colder (warmer) than
           normal
            Alaska                           5.3%     6.5%     12.0%      6.0%
            Michigan                      (13.9)%  (19.5)%    (5.4)%   (12.6)%


SOURCE SEMCO ENERGY, Inc.

Analysts Contact: Thomas Connelly, Director of Investor Relations, 248-458-6163,
or Media Contact: Timothy Lubbers, Director of Marketing and Corporate
Communications, 810-887-4208, both of SEMCO ENERGY, Inc.

www.semcoenergy.com

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding SEMCO Energy's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.

 
©2006 SEMCO ENERGY, Inc., All Rights Reserved.